Bush Rejects Governors' Plea for Bailout

The Wall Street Journal reports that "President Bush, in an annual White House meeting with the nation's governors, bluntly suggested that their states already get plenty of federal funds and should expect no more help from Washington. That message Monday from the former Texas governor disappointed both Democratic and Republican governors, whose states face their worst fiscal plight in a half century--not least, many complain, due to underfunded federal mandates on education and homeland security."

"In an effort to avoid needed spending cuts, many states are asking for a bailout from Washington. But it makes no sense for the federal government to collect more taxes from citizens in the 50 states, only to turn around and send the money back to state governments. That simply adds to federal bureaucracy and doesn't solve the underlying overspending problem," write Cato Director of Fiscal Policy Chris Edwards, Senior Fellow Stephen Moore, and Phil Kerpen of the Club for Growth in "States Face Fiscal Crunch after 1990s Spending Surge" .

"Current state budget woes are the result not of revenue shortfalls but of spending excesses built up during the 1990s," say the authors. "The recent stagnation of state tax revenues comes after a decade of soaring budget growth fueled by the economic boom. Even with the recent large budget gaps, state spending still crept higher in FY02 and FY03.

"Instead, states should turn current budget problems into opportunities to weed out excessive and wasteful spending added during the boom years. For example, states should explore opportunities to save money by privatizing state services. To avoid running into serious budget crunches in the future, states should adopt budget caps that prevent excessive growth in revenues and spending during economic booms."

http://www.cato.org/dispatch/02-25-03d.html

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